C&C says it will sell Tennent's lager all over world

JOHN Dunsmore, the chief executive of Irish drinks group C&C, has revealed plans to turn Tennent's lager into a global brand as he looks to diversify his cider business into beer.

C&C, which makes Magners cider, yesterday provisionally agreed to pay 185 million for the Irish, Northern Irish and Scottish businesses of Anheuser-Busch InBev (ABI), including the Tennent's brands.

The deal, which includes the Tennent's Wellpark brewery in Glasgow, will transform C&C into a portfolio business as it includes distribution rights to certain ABI brands including Stella Artois and Beck's.

Dunsmore said yesterday that he hoped to invest in the brand, building its market share by "several percentage points" in Scotland and Ireland as well as introducing it to new markets across the world.

He said: "This is an investment story. Tennent's is a very strong brand in Scotland, selling one in three pints. But we will certainly expect to invest more behind the brand. We want to make sure we are doing everything we can to enhance Tennent's position in Scotland. It is pretty obvious that Tennent's will be a much bigger fish in a smaller pond in our ownership and we expect to grow its market share in Scotland and Ireland by several more percentage points. Beyond that we would want to take Tennent's beyond the main perimeter of Ireland into England, Europe and the rest of the world, where its sales are virtually nothing."

C&C said the purchase, which needs shareholder approval and will be funded internally and with bank loans, would be immediately earnings accretive, sending its shares racing more than 12 per cent. Dunsmore said he expected cost savings and revenue synergies of 10m a year by 2012 from the purchase.

He added: "We are not going into beer for the sake of it. This deal strengthens opportunities for Bulmers cider in Ireland and Magners cider in Northern Ireland and Scotland by strengthening their route to market and broadening their portfolio position for the company.

"We are also entering into a long-term arrangement with Anheuser-Busch InBev that enables us to invest in their brands such as Stella Artois and Becks and, in some markets, Budweiser. So we can invest in a broader drinks portfolio beyond just the cider business."

Excluding the purchase, C&C reiterated its guidance that full-year operating profit would be at the top end of a previously stated guidance range of 77m (67m) to 82m despite a 5 per cent fall in revenues in the five months to the end of July.

Cider revenues fell 4 per cent in that period, while spirits and liqueurs fell 22 per cent. In Ireland, volumes of C&C's Bulmers cider rose 3 per cent as intensive marketing paid off despite the recession and a wet July.

One analyst said: "Clearly C&C are the only company with synergies in Ireland that could have bought it. It seems quite a high price for a brand that is relatively unknown outside Scotland."

C&C was advised by Rothschild on the transaction, while Lazard Ltd advised AB InBev.